Hedge Fund Said Raising Bonuses Amid U.S. Insider Probe

SAC Capital Advisors LP is raising bonuses for its portfolio managers by 3 percentage points to help retain employees as the U.S. government’s insider-trading probe moves closer to Steven A. Cohen’s $14b hedge fund, according to a person familiar with the matter.

The firm’s portfolio managers are typically paid an annual bonus of about 15% to 25% of the profits they generate from their investments, according to another person.

'This raise should help to allay fears for some SAC employees', said Michael Karp, CEO of Options Group Inc., a New York-based recruiting firm. Hedge funds typically pay bonuses of about 10% to 12% with larger funds paying more, depending on strategy and fees, he said.

SAC was told by the U.S. Securities and Exchange Commission last year that the agency is considering pursuing civil fraud claims related to alleged insider trading in two drugmakers by a former portfolio manager.

Prosecutors say Cohen, the 56-year-old billionaire founder of SAC, discussed the stocks with the manager, the first time they linked him to a transaction at the center of an insider-trading case.